POWER COMMERCIAL AND INDUSTRIAL CORPORATION, petitioner, vs.

COURT OF APPEALS, SPOUSES

REYNALDO and ANGELITA R. QUIAMBAO and PHILIPPINE NATIONAL BANK, respondents.
DECISION
PANGANIBAN, J.:
Is the sellers failure to eject the lessees from a lot that is the subject of a contract of sale with assumption of
mortgage a ground (1) for rescission of such contract and (2) for a return by the mortgagee of the amortization
payments made by the buyer who assumed such mortgage?
The Facts
Petitioner Power Commercial & Industrial Development Corporation, an industrial asbestos
manufacturer, needed a bigger office space and warehouse for its products. For this purpose, on January 31, 1979, it
entered into a contract of sale with the spouses Reynaldo and Angelita R. Quiambao, herein private respondents. The
contract involved a 612-sq. m. parcel of land covered by Transfer Certificate of Title No. S-6686 located at the corner
of Bagtican and St. Paul Streets, San Antonio Village, Makati City. The parties agreed that petitioner would pay
private respondents P108,000.00 as down payment, and the balance of P295,000.00 upon the execution of the deed
of transfer of the title over the property. Further, petitioner assumed, as part of the purchase price, the existing
mortgage on the land. In full satisfaction thereof, he paid P79,145.77 to Respondent Philippine National Bank (PNB
for brevity).
On June 1, 1979, respondent spouses mortgaged again said land to PNB to guarantee a loan
of P145,000.00, P80,000.00 of which was paid to respondent spouses. Petitioner agreed to assume payment of the
loan.
On June 26, 1979, the parties executed a Deed of Absolute Sale With Assumption of Mortgage .

IN VIEW OF ALL THE FOREGOING, the Court hereby renders judgment in favor of plaintiff and against
defendants:
(1)
Declaring the rescission of the Deed of Sale with Assumption of Mortgage executed between
plaintiff and defendants Spouses Quiambao, dated June 26, 1979;
(2)
Ordering defendants Spouses Quiambao to return to plaintiff the amount of P187,144.77
(P108,000.00 plus P79,145.77) with legal interest of 12% per annum from date of filing of herein complaint, that
is, March 17, 1982 until the same is fully paid;
(3)
Ordering defendant PNB to return to plaintiff the amount of P62,163.59 (P41,880.45
and P20,283.14) with 12% interest thereon from date of herein judgment until the same is fully paid.
No award of other damages and attorneys fees, the same not being warranted under the facts and
circumstances of the case.
The counterclaim of both defendants spouses Quiambao and PNB are dismissed for lack of merit.
No pronouncement as to costs.
SO ORDERED.
On appeal by respondent-spouses and PNB, Respondent Court of Appeals reversed the trial court. In the
assailed Decision, it held that the deed of sale between respondent spouses and petitioner did not obligate
the former to eject the lessees from the land in question as a condition of the sale, nor was the occupation

thereof by said lessees a violation of the warranty against eviction. Hence, there was no substantial breach
to justify the rescission of said contract or the return of the payments made. The dispositive portion of said
Decision reads:[11]
WHEREFORE, the Decision appealed from is hereby REVERSED and the complaint filed by Power
Commercial and Industrial Development Corporation against the spouses Reynaldo and Angelita Quiambao
and the Philippine National Bank is DISMISSED. No costs.
Hence, the recourse to this Court .
Issues
Petitioner contends that: (1) there was a substantial breach of the contract between the parties warranting
rescission; and (2) there was a mistake in payment made by petitioner, obligating PNB to return such payments. In
its Memorandum, it specifically assigns the following errors of law on the part of Respondent Court: [12]
A.

Respondent Court of Appeals gravely erred in failing to consider in its decision that a breach of implied
warranty under Article 1547 in relation to Article 1545 of the Civil Code applies in the case-at-bar.

B.

Respondent Court of Appeals gravely erred in failing to consider in its decision that a mistake in
payment giving rise to a situation where the principle of solutio indebiti applies is obtaining in the
case-at-bar.
The Courts Ruling

The petition is devoid of merit. It fails to appreciate the difference between a condition and a warranty and the
consequences of such distinction.
Conspicuous Absence of an Imposed Condition
The alleged failure of respondent spouses to eject the lessees from the lot in question and to deliver actual and
physical possession thereof cannot be considered a substantial breach of a condition for two reasons: first, such
failure was not stipulated as a condition -- whether resolutory or suspensive -- in the contract; and second, its effects
and consequences were not specified either.[13]
The provision adverted to by petitioner does not impose a condition or an obligation to eject the lessees from the
lot. The deed of sale provides in part:[14]
We hereby also warrant that we are the lawful and absolute owners of the above described property, free from any
lien and/or encumbrance, and we hereby agree and warrant to defend its title and peaceful possession thereof in favor
of the said Power Commercial and Industrial Development Corporation, its successors and assigns, against any
claims whatsoever of any and all third persons; subject, however, to the provisions hereunder provided to wit:
By his own admission, Anthony Powers, General Manager of petitioner-corporation, did not ask the corporations
lawyers to stipulate in the contract that Respondent Reynaldo was guaranteeing the ejectment of the occupants,
because there was already a proviso in said deed of sale that the sellers were guaranteeing the peaceful possession
by the buyer of the land in question. [15] Any obscurity in a contract, if the above-quoted provision can be so described,
must be construed against the party who caused it. [16] Petitioner itself caused the obscurity because it omitted this
alleged condition when its lawyer drafted said contract.
If the parties intended to impose on respondent spouses the obligation to eject the tenants from the lot sold, it
should have included in the contract a provision similar to that referred to in Romero vs. Court of Appeals,[17] where the
ejectment of the occupants of the lot sold by private respondent was the operative act which set into motion the period
of petitioners compliance with his own obligation, i.e., to pay the balance of the purchase price. Failure to remove the
squatters within the stipulated period gave the other party the right to either refuse to proceed with the agreement or to
waive that condition of ejectment in consonance with Article 1545 of the Civil Code. In the case cited, the contract

specifically stipulated that the ejectment was a condition to be fulfilled; otherwise, the obligation to pay the balance
would not arise. This is not so in the case at bar.
Absent a stipulation therefor, we cannot say that the parties intended to make its nonfulfillment a ground for
rescission. If they did intend this, their contract should have expressly stipulated so. In Ang vs. C.A.,[18] rescission
was sought on the ground that the petitioners had failed to fulfill their obligation to remove and clear the lot sold, the
performance of which would have given rise to the payment of the consideration by private respondent. Rescission
was not allowed, however, because the breach was not substantial and fundamental to the fulfillment by the
petitioners of the obligation to sell.
As stated, the provision adverted to in the contract pertains to the usual warranty against eviction, and not to a
condition that was not met. The terms of the contract are so clear as to leave no room for any other interpretation. [19]
Futhermore, petitioner was well aware of the presence of the tenants at the time it entered into the sales
transaction. As testified to by Reynaldo,[20] petitioners counsel during the sales negotiation even undertook the job of
ejecting the squatters. In fact, petitioner actually filed suit to eject the occupants. Finally, petitioner in its letter to PNB
of December 23, 1980 admitted that it was the buyer(s) and new owner(s) of this lot.
Effective Symbolic Delivery
The Court disagrees with petitioners allegation that the respondent spouses failed to deliver the lot
sold. Petitioner asserts that the legal fiction of symbolic delivery yielded to the truth that, at the execution of the deed
of sale, transfer of possession of said lot was impossible due to the presence of occupants on the lot sold. We find
this misleading.
Although most authorities consider transfer of ownership as the primary purpose of sale, delivery remains an
indispensable requisite as our law does not admit the doctrine of transfer of property by mere consent. [21] The Civil
Code provides that delivery can either be (1) actual (Article 1497) or (2) constructive (Articles 1498-1501). Symbolic
delivery (Article 1498), as a species of constructive delivery, effects the transfer of ownership through the execution of
a public document. Its efficacy can, however, be prevented if the vendor does not possess control over the thing sold,
[22]
in which case this legal fiction must yield to reality.
The key word is control, not possession, of the land as petitioner would like us to believe. The Court has
consistently held that:[23]
x x x (I)n order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall
have had such control over the thing sold that xxx its material delivery could have been made. It is not enough to
confer upon the purchaser the ownership and the right of possession. The thing sold must be placed in
his control. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser
by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient. But if,
notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the
thing and make use of it himself or through another in his name, because such tenancy and enjoyment are opposed
by the interposition of another will, then fiction yields to reality -- the delivery has not been effected.
Considering that the deed of sale between the parties did not stipulate or infer otherwise, delivery was effected
through the execution of said deed. The lot sold had been placed under the control of petitioner; thus, the filing of the
ejectment suit was subsequently done. It signified that its new owner intended to obtain for itself and to terminate said
occupants actual possession thereof. Prior physical delivery or possession is not legally required and the execution
of the deed of sale is deemed equivalent to delivery.[24] This deed operates as a formal or symbolic delivery of the
property sold and authorizes the buyer to use the document as proof of ownership. Nothing more is required.
Requisites of Breach of Warranty Against Eviction
Obvious to us in the ambivalent stance of petitioner is its failure to establish any breach of the warranty against
eviction. Despite its protestation that its acquisition of the lot was to enable it to set up a warehouse for its asbestos
products and that failure to deliver actual possession thereof defeated this purpose, still no breach of warranty against

eviction can be appreciated because the facts of the case do not show that the requisites for such breach have been
satisfied. A breach of this warranty requires the concurrence of the following circumstances:
(1) The purchaser has been deprived of the whole or part of the thing sold;
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the
vendee.[25]
In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be declared.
Petitioner argues in its memorandum that it has not yet ejected the occupants of said lot, and not that it has been
evicted therefrom. As correctly pointed out by Respondent Court, the presence of lessees does not constitute an
encumbrance of the land,[26] nor does it deprive petitioner of its control thereof.
We note, however, that petitioners deprivation of ownership and control finally occurred when it failed and/or
discontinued paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at public
auction. But this deprivation is due to petitioners fault, and not to any act attributable to the vendor-spouses.
Because petitioner failed to impugn its integrity, the contract is presumed, under the law, to be valid and
subsisting.
Absence of Mistake In Payment
Contrary to the contention of petitioner that a return of the payments it made to PNB is warranted under Article
2154 of the Code, solutio indebiti does not apply in this case. This doctrine applies where: (1) a payment is made
when there exists no binding relation between the payor, who has no duty to pay, and the person who received the
payment, and (2) the payment is made through mistake, and not through liberality or some other cause. [27]
In this case, petitioner was under obligation to pay the amortizations on the mortgage under the contract of sale
and the deed of real estate mortgage. Under the deed of sale (Exh. 2), [28] both parties agreed to abide by any and all
the requirements of PNB in connection with the real estate mortgage. Petitioner was aware that the deed of mortgage
(Exh. C) made it solidarily and, therefore, primarily[29] liable for the mortgage obligation:[30]
(e) The Mortgagor shall neither lease the mortgaged property xxx nor sell or dispose of the same in any manner,
without the written consent of the Mortgagee. However, if not withstanding this stipulation and during the existence of
this mortgage, the property herein mortgaged, or any portion thereof, is xxx sold, it shall be the obligation of the
Mortgagor to impose as a condition of the sale, alienation or encumbrance that the vendee, or the party in whose
favor the alienation or encumbrance is to be made, should take the property subject to the obligation of this mortgage
in the same terms and condition under which it is constituted, it being understood that the Mortgagor is not in any
manner relieved of his obligation to the Mortgagee under this mortgage by such sale, alienation or encumbrance; on
the contrary both the vendor and the vendee, or the party in whose favor the alienation or encumbrance is made shall
be jointly and severally liable for said mortgage obligations. xxx.
Therefore, it cannot be said that it did not have a duty to pay to PNB the amortization on the mortgage.
Also, petitioner insists that its payment of the amortization was a mistake because PNB disapproved its
assumption of mortgage after it failed to submit the necessary papers for the approval of such assumption.
But even if petitioner was a third party in regard to the mortgage of the land purchased, the payment of the loan
by petitioner was a condition clearly imposed by the contract of sale. This fact alone disproves petitioners insistence
that there was a mistake in payment. On the contrary, such payments were necessary to protect its interest as a the
buyer(s) and new owner(s) of the lot.

The quasi-contract of solutio indebiti is one of the concrete manifestations of the ancient principle that no one
shall enrich himself unjustly at the expense of another. [31] But as shown earlier, the payment of the mortgage was an
obligation petitioner assumed under the contract of sale. There is no unjust enrichment where the transaction, as in
this case, isquid pro quo, value for value.
All told, respondent Court did not commit any reversible error which would warrant the reversal of the assailed
Decision.
WHEREFORE, the petition is hereby DENIED, and the assailed Decision is AFFIRMED.
SO ORDERED.

FELICIANO ESGUERRA, CANUTO ESGUERRA, JUSTA ESGUERRA, ANGEL ESGUERRA, FIDELA ESGUERRA,
CLARA ESGUERRA, and PEDRO ESGUERRA, Petitioners,
vs.
VIRGINIA TRINIDAD, PRIMITIVA TRINIDAD, and THE REGISTER OF DEEDS OF MEYCAUAYAN,
BULACAN,Respondents.
DECISION
CARPIO MORALES, J.:
Involved in the present controversy are two parcels of land located in Camalig, Meycauayan, Bulacan.
Felipe Esguerra and Praxedes de Vera (Esguerra spouses) were the owners of several parcels of land in Camalig,
Meycauayan, Bulacan among them a 35,284-square meter parcel of land covered by Tax Declaration No. 10374,
half of which (17,642 square meters) they sold to their grandchildren, herein petitioners Feliciano, Canuto, Justa,
Angel, Fidela, Clara and Pedro, all surnamed Esguerra; and a 23,989-square meter
parcel of land covered by Tax Declaration No. 12080, 23,489 square meters of which they also sold to petitioners, and
the remaining 500 square meters they sold to their other grandchildren, the brothers Eulalio and Julian Trinidad
(Trinidad brothers).
Also sold to the Trinidad brothers were a 7,048-square meter parcel of land covered by Tax Declaration No. 9059, a
4,618-square meter parcel of land covered by Tax Declaration No. 12081, and a 768-square meter parcel of land
covered by Tax Declaration No. 13989.
The Esguerra spouses executed the necessary Deed of Sale in favor of petitioners on August 11, 1937, 1 and that in
favor of the Trinidad brothers on August 17, 1937.2 Both documents were executed before notary public Maximo
Abao.
Eulalio Trinidad later sold his share of the land to his daughters-respondents herein, via a notarized Kasulatan ng
Bilihang Tuluyan ng Lupa3 dated October 13, 1965. A portion of the land consisting of 1,693 square meters was later
assigned Lot No. 3593 during a cadastral survey conducted in the late 1960s.
On respondents application for registration of title, the then Court of First Instance (CFI) of Bulacan, by Decision 4of
February 20, 1967, awarded Lot No. 3593 in their favor in Land Registration Case No. N-323-V. Pursuant to the
Decision, the Land Registration Commission (LRC, now the Land Registration Authority [LRA]) issued Decree No. N114039 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-3631 5 in the name of respondents.
Meanwhile, under a notarized Bilihan ng Lupa6 dated November 10, 1958, petitioners sold to respondents parents
Eulalio Trinidad and Damiana Rodeadilla (Trinidad spouses) a portion of about 5,000 square meters of the 23,489square meter of land which they previously acquired from the Esguerra spouses. 7
During the same cadastral survey conducted in the late 1960s, it was discovered that the about 5,000-square meter
portion of petitioners parcel of land sold to the Trinidad spouses which was assigned Lot No. 3591 actually measured
6,268 square meters.
In a subsequent application for registration of title over Lot No. 3591, docketed as Land Registration Case No. N-335V, the CFI, by Decision8 of August 21, 1972, awarded Lot No. 3591 in favor of Eulalio Trinidad. Pursuant to the
Decision, the LRC issued Decree No. N-149491 by virtue of which the Register of Deeds of Bulacan issued OCT No.
0-64989 in the name of Trinidad.
Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was transmitted to respondents by
succession.
Petitioners, alleging that upon verification with the LRA they discovered the issuance of the above-stated two OCTs,
filed on August 29, 1994 before the Regional Trial Court (RTC) of Malolos, Bulacan two separate complaints for their
nullification on the ground that they were procured through fraud or misrepresentation.
In the first complaint, docketed as Civil Case No. 737-M-94, petitioners sought the cancellation of OCT No. 0-3631.
In the other complaint, docketed as Civil Case No. 738-M-94, petitioners sought the cancellation of OCT No. 0-6498.

Both cases were consolidated and tried before Branch 79 of the RTC which, after trial, dismissed the cases by Joint
Decision10 of May 15, 1997.
Their appeal with the Court of Appeals having been dismissed by Decision of February 28, 2005, a reconsideration of
which was, by Resolution of October 3, 2005,11 denied, petitioners filed the instant petition.
Petitioners fault the appellate court
1. . . . in misappreciating the fact that the act of the respondent Eulalio Trinidad in acquiring the property from
Felipe Esguerra constituted fraud.
2. . . . in the [i]nterpretation and application of the provisions of Article 1542 of the New Civil Code.
3. . . . in ruling that there is prescription, res judicata, and violation of the non-[forum] shopping. 12
In their Comment, respondents assailed the petition as lacking verification and certification against forum shopping
and failing to attach to it an affidavit of service and material portions of the record in support thereof. Petitioners
counter that the procedural deficiencies have been mooted by the filing of a Compliance.
A check of the rollo shows that attached to the petition are an Affidavit of Service dated November 21, 2005 and the
appellate courts Decision of February 28, 2005 and Resolution of October 3, 2005; and that on January 16, 2006 or
almost three months following the last day to file the petition, petitioners submitted, not at their own instance, 13 a
Verification and Sworn Certification on Non-Forum Shopping signed by petitioner Pedro Esguerra who cited honest
and excusable mistake behind the omission to submit the same.
This Court has strictly enforced the requirement of verification and certification, obedience to which and to other
procedural rules is needed if fair results are to be expected therefrom. 14 While exceptional cases have been
considered to correct patent injustice concomitant to a liberal application of the rules of procedure, there should be an
effort on the part of the party invoking liberality to advance a reasonable or meritorious explanation for his failure to
comply with the rules.15 In petitioners case, no such explanation has been advanced.
With regard to petitioners failure to attach material portions of the record in support of the petition, this requirement is
not a mere technicality but an essential requisite for the determination of prima facie basis for giving due course to the
petition.16 As a rule, a petition which lacks copies of essential pleadings and portions of the case record may be
dismissed. Much discretion is left to the reviewing court, however, to determine the necessity for such copies as the
exact nature of the pleadings and portions of the case record which must accompany a petition is not specified. 17
At all events, technicality aside, the petition must be denied.
It is settled that fraud is a question of fact and the circumstances constituting the same must be alleged and proved in
the court below.18
In the present cases, as did the trial court, the appellate court found no fraud in respondents acquisition and
registration of the land, viz:
. . . Appellant Pedro Esguerra even testified that he does not know how appellees were able to secure a title over the
lot in question and that they never sold Lot No. 3593 to Virginia Trinidad since it is part of the whole lot of 23,489
square meters. The said testimony is a mere conclusion on the part of appellants. On the other hand, the evidence
shows that appellees acquired title over the subject property by virtue of a deed of sale executed by their father Eulalio
Trinidad in their favor.
xxxx
[T]hey failed to establish that appellees acquisition of the certificate of title is fraudulent. In fact, in their two
complaints, appellants acknowledged that appellees observed and took the initial procedural steps in the registration
of the land, thus ruling out fraud in the acquisition of the certificate of title. . . . 19
Factual findings of the trial court, when affirmed by the Court of Appeals, are final, conclusive and binding on this
Court,20 which is not a trier of facts,21 hence, bereft of function under Rule 45 to examine and weigh the probative
value of the evidence presented,22 its jurisdiction being limited only to the review and revision of errors of law.23Albeit
there are exceptions24 to this rule, the cases at bar do not fall thereunder, there being no showing that the trial and
appellate courts overlooked matters which, if considered, would alter their outcome.

Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively carries a strong presumption
that the provisions of the law governing the registration of land which led to its issuance have been duly
followed.25 Fraud being a serious charge, it must be supported by clear and convincing proof. 26 Petitioners failed to
discharge the burden of proof, however.
On the questioned interpretation and application by the appellate court of Article 1542 of the Civil Code reading:
In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although there be a greater or less areas or number than that
stated in the contract.
The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning
the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in
the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the
area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in
proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not
accede to the failure to deliver what has been stipulated. (Emphasis and underscoring supplied),
while petitioners admittedly sold Lot No. 3591 to the Trinidad spouses, they contend that what they sold were only
5,000 square meters and not 6,268 square meters, and thus claim the excess of 1,268 square meters.
In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price
contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g.,P1,000 per
square meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be
declared based on an estimate or where both the area and boundaries are stated (e.g., P1 million for 1,000 square
meters, etc.). In Rudolf Lietz, Inc. v. Court of Appeals,27 the Court discussed the distinction:
. . . In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or
increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee
may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the
purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee
has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional
area at the contract rate.
xxxx
In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
the contract. . . .
xxxx
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the
immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned
in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of
sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any
statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or
contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively
indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the
obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that
distinguishes the determinate object.28 (Emphasis and underscoring supplied)
The courts below correctly characterized the sale of Lot No. 3591 as one involving a lump sum contract. TheBilihan ng
Lupa shows that the parties agreed on the purchase price of P1,000.00 on a predetermined, albeit unsurveyed, area
of 5,000 square meters and not on a particular rate per unit area. As noted by the Court of Appeals, the identity of the
realty was sufficiently described as riceland:
It is clear from the afore-quoted Bilihan ng Lupa that what appellants sold to Eulalio was the "bahaging palayan."
Though measured as 5,000 square meters, more or less, such measurement is only an approximation, and not an
exact measurement. Moreover, we take note of the fact that the said deed of sale mentioned the boundaries covering
the whole area of 33,489 square meters, including the "bahaging palayan." Had appellants intended to sell only a

portion of the "bahaging palayan," they could have stated the specific area in the deed of sale and not the entire
"bahaging palayan" . . . .29
In fine, under Article 1542, what is controlling is the entire land included within the boundaries, regardless of whether
the real area should be greater or smaller than that recited in the deed. This is particularly true since the area of the
land in OCT No. 0-6498 was described in the deed as "humigit kumulang," that is, more or less.30
A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference to
its area does not thereby ipso facto take all risk of quantity in the land.31
Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must
consider a host of other factors. In one case,32 the Court found substantial discrepancy in area due to
contemporaneous circumstances. Citing change in the physical nature of the property, it was therein established that
the excess area at the southern portion was a product of reclamation, which explained why the lands technical
description in the deed of sale indicated the seashore as its southern boundary, hence, the inclusion of the reclaimed
area was declared unreasonable.
In OCT No. 0-6498, the increase by a fourth of a fraction of the area indicated in the deed of sale cannot be
considered as an unreasonable excess. Most importantly, the circumstances attendant to the inclusion of the excess
area bare nothing atypical or significant to hint at unreasonableness. It must be noted that the land was not yet
technically surveyed at the time of the sale. As vendors who themselves executed the Bilihan ng Lupa, petitioners may
rightly be presumed to have acquired a good estimate of the value and area of the bahaging palayan.
As for the last assigned error, the appellate court, in finding that the complaints were time-barred, noted that when the
complaints were filed in 1994, more than 27 years had elapsed from the issuance of OCT No. 0-3631 and more than
20 years from the issuance of OCT No. 0-6498. The prescriptive period of one (1) year had thus set in.1awphi1.nt
Petitioners reliance on Agne v. Director of Lands33 is misplaced since the cancellation of title was predicated not on
the ground of fraud but on want of jurisdiction. Even assuming that petitioners actions are in the nature of a suit for
quieting of title, which is imprescriptible, the actions still necessarily fail since petitioners failed to establish the
existence of fraud.
A word on Republic Act No. 716034 which was raised by petitioners in their petition. It expressly requires the parties to
undergo a conciliation process under the Katarungang Pambarangay, as a precondition to filing a complaint in
court,35 non-compliance with this condition precedent does not prevent a court of competent jurisdiction from
exercising its power of adjudication over a case unless the defendants object thereto. The objection should be
seasonably made before the court first taking cognizance of the complaint, and must be raised in the Answer or in
such other pleading allowed under the Rules of Court. 36
While petitioners admittedly failed to comply with the requirement of barangay conciliation, they assert that
respondents waived such objection when they failed to raise it in their Answer. Contrary to petitioners claim, however,
the records reveal that respondents raised their objection in their Amended Answers 37 filed in both cases.
IN FINE, it is a fundamental principle in land registration that a certificate of title serves as evidence of an indefeasible
and incontrovertible title to the property in favor of the person whose name appears therein. Such indefeasibility
commences after the lapse or expiration of one year from the date of entry of the decree of registration when all
persons are considered to have a constructive notice of the title to the property. After the lapse of one year, therefore,
title to the property can no longer be contested. This system was so effected in order to quiet title to land. 38

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.

NAAWAN COMMUNITY RURAL BANK INC., petitioner, vs. THE COURT OF APPEALS and SPOUSES ALFREDO
AND ANNABELLE LUMO,respondents.
DECISION
CORONA, J.:
Under the established principles of land registration, a person dealing with registered land may generally rely on
the correctness of a certificate of title and the law will in no way oblige him to go beyond it to determine the legal
status of the property.
Before us is a Petition for Review on Certiorari challenging the February 7, 1997 Decision [1] of the Court of
Appeals in CA-G.R. CV No. 55149, which in turn affirmed the decision [2] of the Regional Trial Court of Misamis
Oriental, Branch 18 as follows:
WHEREFORE, the plaintiffs-spouses are adjudged the absolute owners and possessors of the properties in question
(Lot 18583, under TCT No. T-50134, and all improvements thereon) and quieting title thereto as against any and all
adverse claims of the defendant. Further, the sheriffs certificate of sale, Exhibit 4; 4-A; Sheriffs deed of final
conveyance, Exhibit 5, 5-A; Tax Declarations No. 71211, Exhibit 7, and any and all instrument, record, claim,
encumbrance or proceeding in favor of the defendant, as against the plaintiffs, and their predecessor-in-interest, which
may be extant in the office of the Register of Deeds of Province of Misamis Oriental, and of Cagayan de Oro City, and
in the City Assessors Office of Cagayan de Oro City, are declared as invalid and ineffective as against the plaintiffs
title.
The counterclaim is dismissed for lack of merit.
SO ORDERED.[3]
The facts of the case, as culled from the records, are as follows:
On April 30, 1988, a certain Guillermo Comayas offered to sell to private respondent-spouses Alfredo and
Annabelle Lumo, a house and lot measuring 340 square meters located at Pinikitan, Camaman-an, Cagayan de Oro
City.
Wanting to buy said house and lot, private respondents made inquiries at the Office of the Register of Deeds of
Cagayan de Oro City where the property is located and the Bureau of Lands on the legal status of the vendors
title. They found out that the property was mortgaged for P8,000 to a certain Mrs. Galupo and that the owners copy
of the Certificate of Title to said property was in her possession.
Private respondents directed Guillermo Comayas to redeem the property from Galupo at their expense, giving
the amount of P10,000 to Comayas for that purpose.
On May 30, 1988, a release of the adverse claim of Galupo was annotated on TCT No. T-41499 which covered
the subject property.
In the meantime, on May 17, 1988, even before the release of Galupos adverse claim, private respondents and
Guillermo Comayas, executed a deed of absolute sale. The subject property was allegedly sold for P125,000 but the
deed of sale reflected the amount of only P30,000 which was the amount private respondents were ready to pay at the
time of the execution of said deed, the balance payable by installment.
On June 9, 1988, the deed of absolute sale was registered and inscribed on TCT No. T-41499 and, on even date,
TCT No. T-50134 was issued in favor of private respondents.
After obtaining their TCT, private respondents requested the issuance of a new tax declaration certificate in their
names. However, they were surprised to learn from the City Assessors Office that the property was also declared for
tax purposes in the name of petitioner Naawan Community Rural Bank Inc. Records in the City Assessors Office

revealed that, for the lot covered by TCT No. T-50134, Alfredo Lumos T/D # 83324 bore the note: This lot is also
declared in the name of Naawan Community Rural Bank Inc. under T/D # 71210.
Apparently, on February 7, 1983, Guillermo Comayas obtained a P15,000 loan from petitioner Bank using the
subject property as security. At the time said contract of mortgage was entered into, the subject property was then an
unregistered parcel of residential land, tax-declared in the name of a certain Sergio A. Balibay while the residential
one-storey house was tax-declared in the name of Comayas.
Balibay executed a special power of attorney authorizing Comayas to borrow money and use the subject lot as
security. But the Deed of Real Estate Mortgage and the Special Power of Attorney were recorded in the registration
book of the Province of Misamis Oriental, not in the registration book of Cagayan de Oro City. It appears that, when
the registration was made, there was only one Register of Deeds for the entire province of Misamis Oriental, including
Cagayan de Oro City. It was only in 1985 when the Office of the Register of Deeds for Cagayan de Oro City was
established separately from the Office of the Register of Deeds for the Province of Misamis Oriental.
For failure of Comayas to pay, the real estate mortgage was foreclosed and the subject property sold at a public
auction to the mortgagee Naawan Community Rural Bank as the highest bidder in the amount
of P16,031.35. Thereafter, the sheriffs certificate of sale was issued and registered under Act 3344 in the Register of
Deeds of the Province of Misamis Oriental.
On April 17, 1984, the subject property was registered in original proceedings under the Land Registration Act.
Title was entered in the registration book of the Register of Deeds of Cagayan de Oro City as Original Certificate of
Title No. 0-820, pursuant to Decree No. N-189413.
On July 23, 1984, Transfer Certificate of Title No. T-41499 in the name of Guillermo P. Comayas was entered in
the Register of Deeds of Cagayan de Oro City.
Meanwhile, on September 5, 1986, the period for redemption of the foreclosed subject property lapsed and the
MTCC Deputy Sheriff of Cagayan de Oro City issued and delivered to petitioner bank the sheriffs deed of final
conveyance. This time, the deed was registered under Act 3344 and recorded in the registration book of the Register
of Deeds of Cagayan de Oro City.
By virtue of said deed, petitioner Bank obtained a tax declaration for the subject house and lot.
Thereafter, petitioner Bank instituted an action for ejectment against Comayas before the MTCC which decided in
its favor. On appeal, the Regional Trial Court affirmed the decision of the MTCC in a decision dated April 13, 1988.
On January 27, 1989, the Regional Trial Court issued an order for the issuance of a writ of execution of its
judgment. The MTCC, being the court of origin, promptly issued said writ.
However, when the writ was served, the property was no longer occupied by Comayas but herein private
respondents, the spouses Lumo who had, as earlier mentioned, bought it from Comayas on May 17, 1988
Alarmed by the prospect of being ejected from their home, private respondents filed an action for quieting of title
which was docketed as Civil Case No. 89-138. After trial, the Regional Trial Court rendered a decision declaring
private respondents as purchasers for value and in good faith, and consequently declaring them as the absolute
owners and possessors of the subject house and lot.
Petitioner appealed to the Court of Appeals which in turn affirmed the trial courts decision.
Hence, this petition.
Petitioner raises the following issues:
I. WHETHER OR NOT THE SHERIFFS DEED OF FINAL CONVEYANCE WAS DULY EXECUTED AND
REGISTERED IN THE REGISTER OF DEEDS OF CAGAYAN DE ORO CITY ON DECEMBER 2, 1986;

II. WHETHER OR NOT REGISTRATION OF SHERIFFS DEED OF FINAL CONVEYANCE IN THE

PROPER REGISTRY OF DEEDS COULD BE EFFECTIVE AS AGAINST SPOUSES LUMO.
Both parties cite Article 1544 of the Civil Code which governs the double sale of immovable property.
Article 1544 provides:
x x x. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Petitioner bank contends that the earlier registration of the sheriffs deed of final conveyance in the day book
under Act 3344 should prevail over the later registration of private respondents deed of absolute sale under Act 496,
[4]
as amended by the Property Registration Decree, PD 1529.
This contention has no leg to stand on. It has been held that, where a person claims to have superior proprietary
rights over another on the ground that he derived his title from a sheriffs sale registered in the Registry of Property,
Article 1473 (now Article 1544) of the Civil Code will apply only if said execution sale of real estate is registered under
Act 496.[5]
Unfortunately, the subject property was still untitled when it was acquired by petitioner bank by virtue of a final
deed of conveyance. On the other hand, when private respondents purchased the same property, it was already
covered by the Torrens System.
Petitioner also relies on the case of Bautista vs. Fule[6] where the Court ruled that the registration of an instrument
involving unregistered land in the Registry of Deeds creates constructive notice and binds third person who may
subsequently deal with the same property.
However, a close scrutiny of the records reveals that, at the time of the execution and delivery of the sheriffs
deed of final conveyance on September 5, 1986, the disputed property was already covered by the Land Registration
Act and Original Certificate of Title No. 0-820 pursuant to Decree No. N189413 was likewise already entered in the
registration book of the Register of Deeds of Cagayan De Oro City as of April 17, 1984.
Thus, from April 17, 1984, the subject property was already under the operation of the Torrens System. Under
the said system, registration is the operative act that gives validity to the transfer or creates a lien upon the land.
Moreover, the issuance of a certificate of title had the effect of relieving the land of all claims except those noted
thereon. Accordingly, private respondents, in dealing with the subject registered land, were not required by law to go
beyond the register to determine the legal condition of the property. They were only charged with notice of such
burdens on the property as were noted on the register or the certificate of title. To have required them to do more
would have been to defeat the primary object of the Torrens System which is to make the Torrens Title indefeasible
and valid against the whole world.
Private respondents posit that, even assuming that the sheriffs deed of final conveyance in favor of petitioner
bank was duly recorded in the day book of the Register of Deeds under Act 3344, ownership of the subject real
property would still be theirs as purchasers in good faith because they registered the sale first under the Property
Registration Decree.
The rights created by the above-stated statute of course do not and cannot accrue under an inscription in bad
faith. Mere registration of title in case of double sale is not enough; good faith must concur with the registration. [7]
Petitioner contends that the due and proper registration of the sheriffs deed of final conveyance on December 2,
1986 amounted to constructive notice to private respondents. Thus, when private respondents bought the subject
property on May 17, 1988, they were deemed to have purchased the said property with the knowledge that it was
already registered in the name of petitioner bank.
Thus, the only issue left to be resolved is whether or not private respondents could be considered as buyers in
good faith.

The priority in time principle being invoked by petitioner bank is misplaced because its registration referred to
land not within the Torrens System but under Act 3344. On the other hand, when private respondents bought the
subject property, the same was already registered under the Torrens System. It is a well-known rule in this jurisdiction
that persons dealing with registered land have the legal right to rely on the face of the Torrens Certificate of Title and to
dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry.[8]
Did private respondents exercise the required diligence in ascertaining the legal condition of the title to the
subject property so as to be considered as innocent purchasers for value and in good faith?
We answer in the affirmative.
Before private respondents bought the subject property from Guillermo Comayas, inquiries were made with the
Registry of Deeds and the Bureau of Lands regarding the status of the vendors title. No liens or encumbrances were
found to have been annotated on the certificate of title. Neither were private respondents aware of any adverse claim
or lien on the property other than the adverse claim of a certain Geneva Galupo to whom Guillermo Comayas had
mortgaged the subject property. But, as already mentioned, the claim of Galupo was eventually settled and the
adverse claim previously annotated on the title cancelled. Thus, having made the necessary inquiries, private
respondents did not have to go beyond the certificate of title. Otherwise, the efficacy and conclusiveness of the
Torrens Certificate of Title would be rendered futile and nugatory.
Considering therefore that private respondents exercised the diligence required by law in ascertaining the legal
status of the Torrens title of Guillermo Comayas over the subject property and found no flaws therein, they should be
considered as innocent purchasers for value and in good faith.
Accordingly, the appealed judgment of the appellate court upholding private respondents Alfredo and Annabelle
Lumo as the true and rightful owners of the disputed property is affirmed.
WHEREFORE, petition is hereby DENIED.
SO ORDERED.